Renting To The Right Tenant
Property managers must always think about the type of tenant that is most likely to reside in that particular building. For example, when apartments in a project rent for $16,000 to $24,000 per year, tenants will be concerned primarily with quality shelter. This means a safe, clean, efficient building but without a lot of frills and amenities.
On the other hand, if the apartments will rent for $35,000 to $45,000 per year, or more, tenants typically expect and demand much more than just shelter. These tenants want a luxurious life-style, and that means the building should contain a health club, a swimming pool, a private park, and similar conveniences.
In the lower priced units, investors will concentrate more on the basic design, quality and layout of each apartment and on the reliability of such things as the elevator service and good maintenance. For common areas, the workings of the lobby intercom system, the location of the mailboxes, and safety, for example, are prime considerations.
However, at the more fully equipped building, the investor faces increased costs of construction and maintenance of areas that produce not direct rental income. If these life-style areas become the slightest bit shabby, it can lead to tenant dissatisfaction and vacancy. The well-equipped, well maintained building usually has a very low vacancy rate. In fact, it often has a waiting list of prospective tenants that assures full occupancy for a long time in the future–a good sign for investors.
Shared Space Offices
With the revolution in communications, building owners must keep up with the changing needs of the corporate tenant. Often the larger, well-organized businesses do not need office space that was necessary just a few years ago. Computers, faxes and e-mail have substituted for leased office space. Office personal are working from home or a small office near their home and coming into the office once in a while for a meeting.
Tenants in an office suite are offered a private office within the suite that has a receptionist, secretarial help, conference rooms and other amenities. This can be a big saving for small space users or users who need a small office for only a short period of time.
Another user is from the large corporation that needs small branch offices in different parts of the country. Other users might be individuals who need a private space for investment or other work activities as well as professionals such as attorneys or accountants who work primarily away from their offices.
The concept of shared space can be used by companies that have excess space that cannot be leased in its entirety. The company’s existing facilities such as copier rooms, computer rooms, cafeterias already are available. Any income from this type of shared space can be nearly 100% profit.
If this is space that is leased by the company rather than owned space, the lease must be reviewed carefully to see if a sublease could violate the sublease/assignment clause of the lease.
The Upkeep And Improvements On Your Rental Property
Keeping your property in top condition is not difficult if it is a continuing effort. There must be a plan in place for making ongoing improvements by investing a portion of each year’s income. Failure to do this will result in a neglected property and additional expense.
The following will immediately make an office or apartment building begin to stand out:
- The outside appearance from the street must give a favorable impression to passers-by, both pedestrians and those in vehicles.
- A new lighting system outside, will enhance the nighttime visibility and take advantage of any nighttime traffic. The building will be more visible from a distance.
- On older buildings, a new paint job on the exterior can change the whole buildings appearance.
- The lobby and interiors of the building must be perceived by tenants and visitors as something unique.
- Replace the wall and floor coverings on each of the floors to produce a lighter, cleaner image. It is seldom necessary to “do” an entire building all at one time, disrupting tenants and running up big costs.